At first glance $1/hour payout for a freelance data entry provider is better than most office clerical jobs that are offered full time. One can just make a quick computation of how lowly paid an employed worker is by just taking the total monthly salary divided by the number of hours spent on the job each month. But, is being a freelance data entry provider better than being employed as a data encoder or clerk in a huge multinational company?

In getting self-employed, there are other important factors which must be taken into account. Success in freelancing means that one must be able to understand one’s personal and business cash flow – the resulting hourly rate should be competitive as well as still make a good living.

Look at the Freelance Job Marketplace Rates First!

Typical rates of data entry providers run anywhere from $1 to $5 per hour on many freelance sites: most offers seem to favor hiring to those who are willing to take the lowest $1 per hour rate. Personally, I didn’t think this kind of pay is enough for the freelance data entry provider to live comfortably – which is further confirmed with the estimate I had outlined below (assuming that the freelancer is honest and wants to update all contributions).

This computation assumes a single freelancer living alone without any dependents and doesn’t even need to rent a place to stay.

PERSONAL
SAVINGS 10% to 20% of personal salary recommended P 2,625
Food and household costs P 4,000
Electricity P 1,000
Social Security Contributions P 1,500
Recreation P 1,000
Cell Phone load P 300
Personal needs P 1,000
Philhealth Contributions P 100
PAGIBIG Contributions P 100
Income tax typically 20% to 30% of taxable income P 1,000
Others gifts, transportation, unexpected expenses P 500
TOTAL p 13,125

FREELANCE BUSINESS
Internet bill and landline up to 384 Kbps internet assumed P 1,000
Repair/maintenance/upgrade parts replacement, repair P 1,000
Consumables paper, printer ink P 500
TOTAL p 2,500

TOTAL: P 15,625 / month or P 187,500 / year

Actual number of weeks each year 52 weeks
Estimated number of holidays/vacations - 2 weeks
Estimated downtime due to sickness/emergencies - 2 weeks
Estimated downtime due to emergencies - 2 weeks
TOTAL 46 weeks

Estimate number of working hours per week = 40 hours /week (understand that not all of those 40 hours are billable hours)

Estimate average number of billable hours per week = 5 hours / day x 5 days = 25 hours /week

number of hours worked each year = 25 hours/week x 46 weeks = 1150 hours /year

Assuming $1 = P45 conversion,

minimum hourly rate of full time data entry personnel = P 187,500 / 1150 hours = P163.0435 per hour or $ 3.62 / hour

Clearly, this is not even enough to even cover other monthly expenses such as rent, loans, insurances, education and training and even on buying personal wants such as jewelries and gadgets. With that kind of lifestyle, this particular freelance data entry provider shouldn’t settle for data entry jobs rates that are below $3.62/hour. Non-productive time such as training should also be considered.

Most often, determined freelancers start out by offering data entry first then moving on to learn new skills in writing, forum and Craiglist postings and social media marketing and other jobs that meet the freelance job demand. Those who have IT knowledge can even further get training on programming, graphic and web development.

How much should the recommended hourly rate be?

The computation above is just the minimum rate for the given lifestyle, but how about the recommended hourly rate? The recommended hourly rate is, of course, greater than the minimum hourly rate because one or more of the following are considered:

  • Actual work experience
  • Job difficulty/complexity of project
  • Job skills required for the job
  • Workload: higher hourly rates is recommended for those working for one or more freelance jobs at the same time

I get my recommended hourly rate by observation: if I easily get hired at every job I’ve applied to then I know my hourly rate is low. If I get rejected one after another, then I know my hourly rate is just too high. Set a rate which result to 50%-50% rejection as much as possible!

For the above example, I recommended hourly rate should be at $5/hour, which is quite high for Philippine-based data entry providers.

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